Greece Passes Austerity Measures In Budget Bill

by Ulrika Lomas, LawAndTax-News.com, Brussels

31 December 2009

Greece’s Socialist party, which holds a 160-seat majority in parliament, unanimously passed an austerity package for 2010, the first in a number of measures to slash state debt by 4% of GDP in 2010. The bill was adopted despite the remaining 139 opposition members voting against the bill, with one opposition member absent.

During a five-day debate in parliament, the Socialist Party rejected calls for cuts to public sector wages and instead favored a relatively small cut of 10% to welfare spending, and put weight behind tackling tax fraud.

Under pressure from the European Union to cut its huge deficit of 12.7%, Greek Prime Minister George Papandreou announced that the government had agreed on an ambitious cut to the deficit in 2010, to bring it to around 9.1% of GDP by year-end, and 8.7% of GDP by end-2011.

Papandreou underscored that corruption, tax fraud and wasteful spending had caused Greece’s deficit to spiral, and said that the government would redouble its efforts to tackle these areas. According to the PM, alongside pay and hiring freezes in the private sector, it is proposed that spending be cut in defence and overseas promotion of Greece as a tourism destination. The Greek government has also recently announced a proposed 90% tax on bankers’ bonuses.

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